The European Aeronautic Defense and Space Co. selected the Alabama site over three rival bids from Melbourne, Fla., Kiln, Miss., and North Charleston, S.C.
Ralph D. Crosby, chairman and CEO of EADS North America, said Mobile was chosen because it is "strategically located" on the Gulf of Mexico, and offers a skilled work force, airport runways and a deep-water port. Brookley Industrial Complex provides 4.5 million square feet of industrial space, and includes access to the Mobile downtown airport.
An Airbus engineering center will be built nearby and is expected to open in 2006, the company said.
The Boeing Co., based in Chicago, lost the tanker deal last year after revelations that it had hired a top Air Force acquisitions official who later admitted giving the company preferential treatment.
The deal would have allowed the Air Force to buy or lease 100 Boeing 767 planes for use as KC-330 refueling tankers, but was killed by Congress in last year's defense authorization bill. The Air Force has said it is likely to reopen the deal to competition, although no formal timeline has been set.
Initially, EADS plans an engineering center that would employ 100 to 150 people. If the company wins the tanker contract, it would then team with a U.S. defense contractor - most likely Northrop Grumman - to build the factory, which could employ as many as 1,100 people.
Alabama Sens. Richard Shelby and Jeff Sessions, Rep. Jo Bonner and Gov. Bob Riley were on hand for the announcement here.
"This victory catapults Alabama toward a new era of growth in the aerospace and defense industries," Riley said in a statement.
During a recent visit to a proposed site near Charleston International Airport, the head of the company's defense division said the contract would be a boon.
EADS, which is based in France and Germany, had said that it planned to offer a tanker version of its Airbus A330 passenger jet for the multibillion-dollar Air Force contract to produce a new generation of aerial refueling tankers.
Boeing spokesman Dan Beck declined to comment specifically on Wednesday's announcement.
Asked about the overall tanker program, Beck said: "There is not a competition [right now]. There is no tanker replacement program, so there is nothing for us to address at this point."
The immensely public search gave EADS some much-needed positive spin at a time when the U.S. and the European Union are engaged in a trade battle over the EU's subsidies to Airbus, which the U.S. claims gives it an unfair advantage over its chief rival, Boeing.
EADS hopes to get a substantial portion of an expected $9 billion in new spending for military tanker planes, but congressional leaders are trying to tie the subsidy debate to the contract decision.
"My only guess is the openness is political," said Charles Hill, a professor at the University of Washington School of Business who closely follows the aeronautics industry.
"They are trying to send a message," he said. "Their strategy is to have quite a bit of work done in the United States. It is clear they want to be seen as a global organization, not just a European one."
EADS and subsidiaries already have facilities in Mississippi and Alabama. EADS-owned American Eurocopter LLC opened a helicopter factory in Columbus, Miss., last year, and EADS North America this year invested in a new support center for Coast Guard patrol aircraft in Mobile near the proposed site for the tanker factory.
By Jeffrey McMurray